Strengthening the Caribbean’s Capital Markets

Exploring a leading financial platform for growth and global market integration

 

Since its establishment in 1986, the Barbados Stock Exchange (BSE) has been at the forefront of financial market development in the Caribbean.

The BSE has established itself as a cornerstone of Barbados’ financial landscape, offering a secure and transparent platform for trading securities.

The exchange’s continuous efforts to strengthen international partnerships and increase Barbados’ appeal as a financial hub have been essential to its current success. Likewise, its strong relationships with brokers, listing sponsors, and regulators have allowed it to operate under the highest standards of transparency and integrity.

The BSE has already made significant strides by securing recognition from His Majesty’s Revenue and Customs (HMRC) in the UK and is further expanding this recognition to other key markets, such as North America and Europe.

This will allow the exchange to attract more international listings and investments while enhancing its global credibility.

To support these efforts, the BSE’s leadership has also focused on integrating with other regional exchanges, such as those in Jamaica and Trinidad. This increases liquidity and investor confidence and contributes to a more unified and attractive Caribbean capital market.

Continuous technological innovation has also been crucial behind the scenes.
The BSE’s transition to an entirely electronic trading system, with brokers connected remotely via VPN, has completely modernized its operations. Additionally, further investment in blockchain technology and AI-driven trading tools is being considered as it could streamline efficiency and enhance security.

The Barbados Stock Exchange has emerged today as a thriving financial ecosystem where local and international companies seek listings, and investors can have confidence in their market interactions.

Thanks to its financial innovation and operational integrity, the Barbados Stock Exchange proudly stands as a regional leader for the Caribbean and beyond.

A Lean but Effective Organizational Structure

Despite its broad range of responsibilities, the exchange operates with a lean workforce of just seventeen employees. The team, led by Managing Director Marlon Yarde, brings extensive industry expertise.

This depth of experience allows the organization to maintain high levels of efficiency while upholding stringent regulatory standards.

Initially launched as the Securities Exchange of Barbados, the Barbados Stock Exchange has evolved over the decades, adapting to the needs of a growing financial sector.

“In 2001, we changed our structure and became a mutual company which was owned by the members of the Barbados Stock Exchange… by 2016 we demutualized, and former members became shareholders, making us a for-profit organization,” Yarde says.

The shifts into the current foundation of the BSE were driven by the need to streamline the process of trading securities.

Previously, buying and selling shares was a cumbersome legal process that required direct negotiations and formal legal documentation.

Recognizing the inefficiencies, business leaders in Barbados sought to establish a structured, transparent exchange that would facilitate trade and encourage investment. Over the years, the Exchange expanded its offerings to attract international players.

A pivotal moment came in 2016 with the launch of the International Securities Market (ISM), which enabled trading in global securities, including assets denominated in US dollars, Canadian dollars, and British pounds.

This strategic pivot increased the exchange’s attractiveness to international investors and, overall, allowed investors and issuers to operate within a regulated and more efficient marketplace, strengthening Barbados as both a leading force in regional capital markets and a global financial hub.

Today, the Barbados Stock Exchange Inc. (BSE) operates as part of a well-structured group comprising three entities: the BSE itself, and its two subsidiaries, the Barbados Central Securities Depository Inc. (BCSDI), and the BCSD Custodian Trust Services Inc. (BCTSI).
Each organization serves a specific role in ensuring seamless operations and market stability.

The BCSDI, established in 1999, manages registrar services, including maintaining shareholder records and processing dividend payments. It acts as the backbone of the exchange, ensuring the smooth transfer of securities and managing investor accounts.

BCTSI, the newest addition to the group, was launched in 2021 to provide custodial and trust services for institutional investors such as insurance companies and pension funds.

“Organizations like insurance companies need to have certain assets set aside for certain contingencies, and the law requires an independent third party to custody those assets.

So, we function as custodians for the financial institutions here in Barbados,” Yarde explains.

Lastly, the Financial Services Commission (FSC) regulates the BSE, to ensure adherence to international best practices.

As our primary regulator, the FSC oversees listed companies and brokers while maintaining alignment with global regulatory standards like those set by the International Organization of Securities Commissions (IOSCO).

This commitment to transparency, investor protection, and systemic risk reduction is why the BSE is so well received and trusted in both regional and global markets.

Technology and Partnerships at the Core of Operations

The BSE has embraced technology as a driving force behind its operational efficiency and market competitiveness. As a fully electronic exchange, brokers trade remotely using a secure VPN connection, eliminating the need for physical trading floors.

The exchange’s core trading platform, provided by Estonian firm Percival, consists of two integrated systems: DEPEND, which manages registrant and shareholder records, and REVENUE, a proprietary trading engine developed with input from the BSE.

“So, the systems are tightly coupled. When we trade, it allows the registrar and transfer agent software, DEPEND, to move securities from the seller to the buyer when trades occur. So, it is a seamless, tightly coupled system,” Yarde clarifies, explaining how these platforms work in tandem to achieve results.

The Barbados Stock Exchange has also explored blockchain technology as a potential tool for trading security tokens. Although its rules allow it to do so, the regulatory complexities involved have led the exchange to take a cautious approach.

In the meantime, the BSE continues to focus on integrating technological solutions that enhance efficiency with as little regulatory red tape as possible.

Regardless, thanks to platforms like DEPEND and REVENUE, the exchange has also been able to prioritize settlement efficiency.

“When I first came to the stock exchange, the settlement cycle was T+5. In that, a trade occurs on one day and settlement occurs five days later. Then we moved to T+3 and shortened the settlement cycle. And earlier in 2024, we moved to a settlement cycle of T+1,” Yarde says, explaining that this significantly improved transaction speed and reduced settlement risks.

Despite having such powerful supporting platforms, the BSE’s success is also built on strong relationships with key market participants, including brokers, listing sponsors, regulators, and institutional investors.

The exchange works closely with nine registered brokers who facilitate trading and connect investors with market opportunities. Listing sponsors—often, legal firms—also play a vital role in attracting new listings to the exchange, particularly within the ISM.
Additionally, to ensure regulatory oversight, another cornerstone of its operations, the exchange collaborates closely with the FSC to uphold international best practices and protect investors.

“Our regulator is very supportive, they know what we’re trying to achieve, and they support us in our endeavors. We talk with each other and make sure that we are on the same page as it relates to taking regulatory action so that we do not appear to operate at cross purposes. They let us take the lead on matters under our purview as a self-regulatory body, but we do not do anything before we say to them, this is what is happening. This is what we are considering doing. Do you have any thoughts on this matter?’ And they let us know if they think we are moving in the right direction or if we should look at another approach,” Yarde says.

Over the years, the BSE’s international collaborative efforts have garnered incredible acknowledgement, with the exchange securing designation as a recognized stock exchange by HMRC in the United Kingdom.

“What that means is that the securities listed on our exchange are treated as if they were listed in the UK and receive the same benefits,” Yarde explains, clarifying that this status provides tax advantages for companies listed on the BSE, making it an attractive option for foreign investors.

Expanding Market Reach and Future Growth Initiatives

One of the most significant initiatives currently underway at BSE is its effort to attract small and medium-sized enterprises (SMEs) to list on the Innovation and Growth Market (IGM) of the BSE.

The BSE is actively working to educate and prepare SMEs for listing through collaboration with the Ministry of Energy and Business (MEB), the Small Business Association (SBA), and the Caribbean Development Bank (CDB).

This initiative aims to provide growth-oriented businesses with access to capital, helping them expand their operations and contribute to economic development.

The project is structured in three phases: an initial awareness campaign, a diagnostic and capacity-building stage, and a final phase focused on raising capital and listing.

The goal is to bring at least 20 SMEs to market and strengthen Barbados’ economic landscape by diversifying the exchange’s offerings.

On a broader scale, the BSE is championing efforts to integrate the Caribbean’s capital markets.

Recognizing that small individual markets may struggle to attract significant foreign investment, Yarde envisions a unified regional exchange that would present the Caribbean as a cohesive investment destination.

By fostering collaboration between the major stock exchanges of Barbados, Jamaica, Trinidad & Tobago, and the Eastern Caribbean, the region could enhance its global appeal and attract greater levels of direct investment.

“If we work separately, we are too small to attract big investors and companies and get them to list their securities here. But if we come together and integrate our markets into a single market with satellite exchanges, it would make us more attractive for foreign direct investment,” Yarde says, noting how this collaboration would benefit the economies and people of the Caribbean as a whole.

As the BSE continues to evolve, a key focus remains on long-term sustainability. The exchange will focus more on leadership succession planning to prepare the next generation of financial professionals to uphold the BSE’s mission and drive future growth.

By embracing technology, strengthening regulatory oversight, fostering strategic partnerships, and expanding market access, the BSE is solidifying its role as a leader in the Caribbean’s capital markets.

Through ongoing training, mentorship, and strategic hiring, it is positioning itself to remain at the foundation of Barbados’ financial sector for years to come.

As the BSE looks ahead, it is committed to driving financial innovation, supporting economic growth, and ensuring that Barbados remains a competitive player in the global financial landscape.

At a Glance

Who: The Barbados Stock Exchange (BSE)

What: A leading financial institution providing a secure, transparent platform for securities trading, market regulation, and international investment opportunities in Barbados and the Caribbean.

Where: Headquartered in Barbados, with international market reach across North America, Europe, and the Caribbean.

Website: www.bse.com.bb

PREFERRED VENDORS/PARTNERS